In response to appeals by New York City and 400 local housing departments across the country, the U.S. Department of Housing and Urban Development last week decided to drop its proposal to reduce financing this year for Section 8 housing vouchers.

The decision means the federal government will pay more than $52 million this year for Section 8 and other housing program vouchers to the city Department of Housing Development and Preservation and to the New York City Housing Authority to subsidize low-income residents.

But the threat still remains of changes in federal housing voucher programs for 2005 and subsequent years that could reduce or eliminate subsidies available under various housing programs.

City Councilmember Margarita Lopez, whose Lower East Side District includes many Section 8 housing units with thousands of residents, was overjoyed. You dont know how happy this news makes me, she told The Villager. Ive been working to create Section 8 housing since I came here in 1978  on E. 10th St., 12th, 14th, Ninth, Sixth St. Section 8 is vital to keeping people in their homes and any reduction in funding or changes in structure that exclude families would be a disaster, she said.

Lopez said that housing costs in the city have increased so much that middle-income families can no longer afford to live in the city. She said she had no problem with changes pending in Congress that would extend Section 8 eligibility to more affluent tenants.

But its bad to expand Section 8 without funding it. If you expand it, you have to provide the money to cover everyone, she said. Elected officials and housing advocates, me included, put on a strong campaign. We forced the Bush administration to save Section 8, she added.

The restored funding means HUD will pay $37.2 million to NYCHA and $14.9 million to H.P.D. programs.

Tenants of Independent Plaza North, the Tribeca housing complex where many residents receive Section 8 vouchers, were relieved at the decision but were apprehensive about future subsidy reductions.

It lets us take a breath for a second, said Diane Lapson, I.P.N. Tenants Association president. But its right before the election, so the vouchers are safe for the moment. Bush proposed the cuts himself and we cant rest until we know that vouchers are permanent, she added.

The new owners of I.P.N. took the complex out of the Mitchell-Lama affordable housing program earlier this year after agreeing to keep existing tenants at current rent levels in a deal that required all eligible tenants to apply for a federal voucher program similar to Section 8.

HUD proposed the reduction for Section 8 vouchers because program costs had ballooned in the past two years, according to Adam Glantz, regional spokesperson for the agency. We told local agencies that we would fund the program at 2003 rent levels, he said. After about 400 local agencies, including the citys H.P.D. and NYCHA, filed appeals against the reduction, HUD decided the vouchers would be funded at 97 percent of 2004 rent levels.

The appeals included direct negotiations between Mayor Bloomberg and HUD Secretary Alphonse Jackson.

HUDs review more accurately reflects the real increase in costs we are facing in the strong housing market in New York City, said H.P.D. Commissioner Donovan. Were grateful to HUD and to the mayor for his powerful advocacy in Washington, Donovan added.

The reduction of Section 8 funding would have threatened Bloombergs plan to build or renovate 65,000 units of affordable housing and could have discouraged financing of subsidized private housing, Donovan added.